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European producers of dioctyl phthalate turn down sales

December 15/2011

(ICIS) -- European producers of dioctyl phthalate (DOP) are turning down sales to avoid negative margins, market sources said on Thursday. Prices in northwest Europe are at EUR1,2801,340/tonne FD (free delivered), although some producers are reportedly declining bids below EUR1,350/tonne (USD1,753/tonne) FD. We are not selling any product below EUR1,350/tonne as there is no margin at these levels, said a northwest European producer.


Other local suppliers are currently selling material at EUR1,300/tonne FD NWE (northwest Europe) and above, and are reluctant to negotiate lower prices. If demand does not recover, production will be reduced accordingly, said one producer. However, cheaper material is being sold by eastern European producers, with offers in the high EUR1,200s/tonne FD NWE.


Several DOP producers in Europe supply 2-ethylhexanol (2-EH) and phthalic anhydride (PA), while they purchase orthoxylene (OX) from third parties. One producer said: Each producer has a different production cost base, as they have access to raw material at different price levels."


Depressed conditions in DOP, which accounts for two-thirds of the low-phthalate market in Europe, are caused by a number of factors.


Firstly, the long-term negative sentiment caused by European environmental restrictions has led to a gradual shift of demand to Reach-friendly high-phthalate compounds such as di-isononyl phthalate (DINP) and di-propyl heptyl phthalate (DPHP). Reach the registration, evaluation and regulation of chemicals is the EU chemical regulation programme.


Secondly, the downtrend has been exacerbated by depressed conditions in the downstream polyvinyl chloride (PVC) and construction sectors, in which activity remains far below pre-crisis levels.


Thirdly, fears of a double-dip recession have led producers of plasticisers to bring the annual destocking cycle forward, leading to an improvement in product availability and lower prices in alternative products such as DINP and DPHP.


Consumption is at a record low, with very few spot deals heard in the market and some producers struggling to find customers or secure contracts for January. Week-on-week decreases brought Europes DOP spot values down to a 20-month record low two weeks ago. However, recent cuts in operating rates to 5060% at some manufacturing sites have successfully stabilised prices.


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